Bangladesh has been performing creditably on the economic front and its gross domestic product (GDP) has been growing steadily at a rate of 6.0 to 7.0 per cent annually over the years. But employment opportunities for the people and their earnings have not increased commensurate with the economic growth rate. When economic growth does not guarantee increased employment, income inequalities in society are not reduced and inclusive growth can not take place.
The concern that Bangladesh is gripped with a similar situation was raised by economists and planners. Most recently the alarm was raised by South Asian Network for Economic Modeling (SANEM), a private research organisation, in its quarterly review on Bangladesh economy. The organisation observed that despite a fairly high rate of growth over the last few years, the job market has not expanded and as such condition of the common lot has hardly improved.
Centre for Policy Dialogue (CPD) in its dialogue on budget 2017-18 echoed the same concern and was of the view that the country is fast heading towards a great depression of joblessness. As steady rate of growth failed to generate enough employment, rate of educated unemployed in the country has exceeded 30 per cent. When rate of unemployment in USA was 20 per cent, it was labelled as a great depression.
Meanwhile, speakers in the first conference of Bangladesh Economist Forum were of the opinion that if Bangladesh does not change its present pattern of development, it will soon turn into a nation of jobless growth and middle-income trap. The latter refers to a situation of loss of export worthiness of finished products due to increased wages. Newly industrialised South Africa and Brazil are stranded in a similar situation. According to the World Bank, despite reaching middle-income status, these two countries are not being able to effect better standard of living for the common people. They are rather stuck in a situation characterised by low private investment, slow progress of secondary industries, failure to diversify industries and fragile labour market.
In recent times Bangladesh has been experiencing an unchanged employment situation. On the contrary, unemployment situation has worsened and a total of about 61 million people are either partly or fully unemployed. While 2.0 million people enter job market every year on an average, only 600,000 new job opportunities were created in 2014 and 2015. Between 2003 and 2013, nearly 1.38 million job opportunities were created. According to another statistics, 1.4 million new jobs were created in 2013-14 and 2015-16, meaning an average of 0.7 million new jobs per year. This situation disturbing when Bangladesh achieved steady growth of 6.0 per cent or more for years which was matched by very few countries in the world.
In a jobless growth economy, unemployment remains stubbornly high even as the economy grows. Gloomy picture of employment generation over the past few years is linked to the sluggish private sector investment. The major concern is whether Bangladesh has entered a phase of 'jobless growth'. Policies and actions, which can promote private sector investment in diversified labour-intensive manufacturing and services sectors, are necessary to increase large-scale employment. There is a need of serious thinking in the policy-making arena to avoid the 'jobless growth' phenomenon. Prudent macroeconomic policy will bring in more foreign direct investment (FDI) that will aid job creation if major concerns on the demand and supply sides are addressed. As a long-term measure, there is a need to boost entrepreneurial instincts within the young demographic base and substantially invest in human capital via education along with other knowledge development incentives. Otherwise, jobless growth will only ensure that the demographic dividend becomes a demographic curse.
A jobless recovery or jobless growth is an economic phenomenon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment. The prospect of a jobless growth economy has ramifications for everyone. An economy that is experiencing growth without an expanding job market poses a challenge for the investors.
When growth is coupled with high unemployment, it means that the economy is experiencing structural changes. Such structural shift offers opportunities to some and makes things difficult for others. Joblessness is also a challenge for inclusive growth as in a jobless growth economy income inequalities of people are not likely to change.
Manufacturing and services must become the engine of employment growth, so that modern economic development takes place. This calls for skill development on a massive scale. Labour law reforms that encourage greater flexibility while providing a safety net for the unemployed is equally necessary. In this milieu, we must come out with policy and action plans to address low private investment, shrinking labour market, slow export growth, falling remittance, fragile banking sector and weak governance which constitute the major causes of unemployment despite creditable economic growth.